NASHVILLE — Tennessee Regulatory Authority directors on Monday unanimously rejected Piedmont Natural Gas Co.’s request to implement a “decoupling” mechanism that critics contend would let the firm hike rates on consumers even as they use less gas.
An attorney for the Chattanooga Manufacturers Association, which is fighting a similar decoupling proposal made by Chattanooga Gas Co., later said he believes the ruling effectively sets a “high bar for Chattanooga Gas to jump over” as the company pushes its own decoupling case with a hearing set in April.
Earlier, the three TRA directors hearing Piedmont’s petition questioned the decoupling provision, which sought to break the link between Pidemont’s fixed-cost recovery and gas usage.
The natural gas companies and some environmentalists argue decoupling encourages the firms to push energy-saving programs since such measures would no longer financially harm them.
But critics contend natural gas use is already falling and decoupling simply gives regulated gas monopolies like Piedmont and Chattanooga Gas, owned by AGL Resources Inc., a way to extract more money from their customers.
What’s nextTennessee Regulatory Authority directors are looking at coming to Chattanooga the week of April 12 to hold a one-day public comment session allowing local residents to weigh in on Chattanooga Gas Co.’s rate case.
In making the motion to reject the petition of Piedmont, which operates in Middle Tennessee, TRA Director Mary Freeman said the gas company first sought to get the TRA to go along with a decoupling proposal and, when that failed, mounted an effort last year in the General Assembly to change state laws. Finally, they came running back to the TRA, she said.
“It is abundantly clear to me that Piedmont circumvented the authority last year when it filed legislation in the General Assembly, and now, after the General Assembly expressed a desire to study the decoupling issue, Piedmont is attempting to circumvent the General Assembly by filing its petition with the TRA,” she said.
Fellow Director Eddie Roberson said he disagreed with Piedmont’s effort to argue that a 2009 state law promoting energy efficiency specifically pushes decoupling.
He and other TRA directors were critical of Piedmont’s decision to press its TRA case outside a traditional rate case, saying the company’s use of 2003 figures would result in “piecemeal” ratemaking that could benefit the company’s bottom line.
Ms. Freeman said the TRA’s actions “should not be viewed as the authority’s position on decoupling in general or as taking any position in future dockets before the agency.”
Chattanooga Gas is seeking to decouple as part of an overall rate case.
Piedmont Gas Senior Vice President Frank Yoho later said company officials are “disappointed” by the decision. He said critics are wrong in saying decoupling won’t benefit customers, arguing, “if you use less gas, the bill will go down.”
The state attorney general’s Consumer Advocate and Protection Division opposed both Piedmont’s case as well as Chattanooga Gas’ pending case.
Henry Walker, an attorney for the Chattanooga Manufacturers Association that opposes Chattanooga Gas’ petition, acknowledged that TRA directors said if decoupling is to be done, it should come within the context of a rate case such as the one filed by Chattanooga Gas.
But, he said, “What they said today, I think, makes it a lot less likely that Chattanooga will get decoupling. I felt a cold wind coming from the bench on the whole idea of decoupling.”
Bryan Batson, AGL Resources vice president of government and regulatory affairs, said company officials “feel comfortable about the decoupling program” they filed for Chattanooga Gas.
“It’s current data. It’s within a rate case,” he said. “The TRA gets to consider all aspects.”
He said consumers ultimately will pay less with decoupling.